Liability Risk Is Beginning To Flow Down The Beef Production Chain

The whole topic of liability is a frustrating one for cow-calf producers. After all, a cow-calf producer has no way of controlling what happens to the product once it leaves the ranch. However, in today’s litigious world, someone is going to be sued if a problem develops.

Retailers, packers, and feeders tend to be much larger enterprises; thus, they’re much more appealing targets from a trial lawyer’s viewpoint. That doesn’t mean, however, that cow-calf producers are immune from such legal action.

Lawyers at the retailer and packer levels understandably work hard to protect their clients. Increasingly, they are asking for affidavits or some other form of guarantee that the products or cattle they procure haven’t been fed animal byproducts and that withdrawal guidelines, etc., have been followed.

Meanwhile, the hotel, restaurant and institutional (HRI) sector has created additional value by making specific claims regarding those product. That value, however, has potential risk associated with it, as one misstep can create big problems. That means the HRI trade and retailers are demanding assurances from packers in order to limit any liability exposure.

Not surprisingly, as the packers have been forced to accept that liability, their lawyers are demanding assurances from their suppliers. Now, the feedlots and auction markets are going to be demanding those assurances from their suppliers as well.

It can be argued that this is a good thing, and it’s certainly understandable. Thus, everyone will be very cognizant of meeting standards while animals are under their control; they’ll also demand that guidelines have been followed prior to their taking control of the animal. Of course, it also means that liability will be pushed back to the cow-calf sector as well.

The challenge becomes making sure these assurances can be made, while not impeding the rate and flow of commerce. I don’t envy the logistics and paperwork of a sale barn, for instance, that sells a load of cows and must have 25 different owners sign an affidavit and store it on file.

Assurances will have to be made

Eventually, it will be understood that any time an animal changes hands, assurances will have to be made; it will simply be seen as a necessary cost of doing business – like brand inspections and health papers. In the short term, it will pose challenges, especially for the sale barns across the country.

Perhaps, to make it easier, the industry needs to standardize and create such forms. Currently, we have different buyers with different forms, even though they are essentially the same. Perhaps some entrepreneur will come up with a phone app that will enable producers to fill out and sign these forms electronically and store them on a cloud somewhere so they can be easily accessed.

This week, USDA’s Animal and Plant Health Inspection Service announced its plans for moving forward with its traceability initiative. There’s been a lot of concern in the country about traceability, but the marketplace is beginning to demand it to a degree that the argument is shifting.

Without question, there is a cost associated with this degree of record keeping. But the debate is no longer about whether or not it is going to be required, as the consumer has spoken. The question is how do we create a system that minimizes the costs and does not impede the flow of commerce?

With mandatory country-of-origin labeling, the great debate was whether it should be voluntary or mandatory. In regard to traceability, we have debated how the data should be stored, who will have access, and the degree to which the government should be involved. The marketplace is answering those questions by instituting a mandatory/voluntary program.

Of course, you have a right not to sign the affidavits. However, if you exercise that right, you also have to understand that those buyers will exercise their right to not buy your cattle.